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Intermediate Accounting I Question Paper

Intermediate Accounting I

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2010

INSTRUCTIONS:
• Answer Questions ONE and any TWO questions.

Question One
a) Discuss four generally accepted Accounting principles and guide the recognition
and measurement of accounting information. (8marks)

b) Distinguish between the following terms
i. Accrual accounting and cash basis accounting (2marks)
ii. Depreciation and Depletion (2marks)
iii. Trademarks and Trade names (2marks)
iv. Trade discount and cash discount (2marks)

c) Explain the accounting treatment for sales returns. (5marks)

d) Describe the secondary characteristics of accounting information (4marks)

e) Describe the accounting procedures for valuing and recording goodwill (5marks)

Question Two
a) ABC Company sold goods to XYZ traders on May 1, 2008. ABC company agreed to
accept a Kshs.1,400,000 for 6 month, 12% note in payment for the goods. Interest is
payable at maturity.

Required:
Prepare journal entries to record the above transactions. (8marks)

b) On 31st November 2009, a company reported the following transactions in stock that
occurred during the month of October.

Date
Date Units received Cost (Kshs)
1
st October 3,000 20
5
th October 2,500 22
18th October 5,000 21
29th October 4,000 19

Sales were as follows
Date Units received Cost (Kshs)
3
rd October 3,000 30
8
th October 2,000 32
15th October 3,500 30
25th October 4,000 29
29th October 2,500 29

At the beginning of the month of October there were 1,500 units valued at Kshs 18 each.

Required:
Determine the value of closing stock using the FIFO method and ascertain the profit for
the month of October.
(12marks)

Question Three
a) Explain how goodwill should be amortised once recognized in the accounts.
(6marks)
b) Benard Inc. Company owns land that it purchased on 1st January 2005 for
Ksh. 800,000. At what amount should Benard report this asset on its
December 31, 2009 balance sheet? Explain. (6marks)
c) Highlight the major characteristics that may be used to divide tangibles
(4marks)
d) What are the major factors to be considered in determining the
depreciation method to be used. (4marks)

Question Four
The following are account balance Dan Enterprises Ltd for the year ended 31st December
2009.
Investor 1st Jan 2009 461,219
Sales 3,053,081
Sales discounts 24,241
Sales returns 56,427
Sales Office Salaries 59,200
Sales salaries and commissions 202,644
Travel and entertainment 48,940
Freight and Transportation out 41,209
Shipping surplus and expenses 24,712
Postage and stationery 16,788
Depreciation of sales equipment 9,005

Telephone 12,215
Office Salaries 186,000
Legal and professional services 23,721
Utilities expense 23,275
Insurance expense 17,029
Depreciation of building 18,059
Depreciation Of office equipment 16,000
Stationery, Supplies and postage 2,875
Miscellaneous office expenses 2,612
Purchases 1,989,693
Purchase discounts 19,270
Freight and transportation-in 40,612
Divided Revenue 98,500
Rental Revenue 72,910
Interest on bonds 126,060
IA come taxes 66,934
Inventory 31st December 2009 489,713

Required:
Prepare a multiple step income statement . (20marks)

Intermediate Accounting I Question Paper

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